Wal-Mart (NYSE:WMT) is the Big Kahuna of retailing, so it's only natural for it to strike up an exclusive direct-to-retail deal with legendary surfwear brand Ocean Pacific. The partnership will help stock the world's largest chain's mostly unhip clothing racks with a brand that once defined surf apparel.
Sure, this isn't the mid-'70s, when Iconix Brand Group's (NASDAQ:ICON) Ocean Pacific (and its signature Op logo) exploded on the scene, with sales tripling on an annual basis. But we're also not talking about the bleakness that Ocean Pacific suffered during the '90s, when the brand that had expanded into nearly all facets of extreme sports -- from skateboard to snowboarding to motocross -- was neglected by fickle enthusiasts moving on to the next big thing.
The brand has had a bit of a renaissance in recent years. New ownership brought back the once iconic Op Pro annual surfing competition in 1998. Ocean Pacific then went on to find celebrity endorsers on this side of the millennium, extending itself to alternative rockers like Hoobastank and Fu Manchu, as well as electronica pioneer The Crystal Method.
Extreme sports offer compelling apparel opportunities. Just check out the success of companies like Volcom (NASDAQ:VLCM), on the apparel design side, or retailers like Zumiez (NASDAQ:ZUMZ), Pacific Sunwear (NASDAQ:PSUN), and Quiksilver (NASDAQ:ZQK).
The challenge for Iconix will be to cash in without appearing to have sold out. It's a delicate balance, especially if the brand is eventually perceived as an in-house Wal-Mart label. However, if you ink an exclusivity deal, you can't go wrong by hooking up with the country's leading apparel retailer. By the time the new product lines roll out next year, you're going to be seeing a whole lot of Op around.
Even if most of those Ocean Pacific-donning kids think "hang ten" is something you do when you blow $10 at the local arcade, it's the easiest way to ride the biggest wave.
Wal-Mart is an active stock pick for Inside Value newsletter subscribers. Zumiez and Volcom have been recommended to Hidden Gems subscribers. Pacific Sunwear is a Stock Advisor selection. Whether or not you have an old pair of Op surf trunks, Hawaiian silk shirt, or T-shirt in your apparel arsenal, a free 30-day trial subscription to either newsletter service is yours for the taking.
Longtime Fool contributor Rick Munarriz has wiped out plenty of times on Flowrider surfing simulators. He does not own shares in any of the companies in this story. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a gnarly disclosure policy.
